Full House Stock Could Be Royal Flush for Investors

With a market capitalization of just $186.43 million, Full House Resorts (NASDAQ:FLL) stock is one of the smallest publicly traded domestic gaming equities.

A closing handle of $7.14 on Feb. 26 only adds to that diminutive status. But one analyst sees the regional gaming company shedding those tiny figures. In a note to clients earlier this week, Roth Capital analyst David Bain reiterated a “buy” rating on the stock, while lifting his price target on the shares to $14 from $9, implying the shares can nearly double.

Part of Bain s enthusiasm for the shares is derived from expansion plans at in Cripple Creek, Colo.

Full House has spent $10 million and earmarks an additional $180 million for ~300 rooms and suites, ~720 gaming positions ~300 parking spots and other amenities,” writes the analyst. “Bronco Billy s also benefits from legislative gaming expansion allowing new table game offerings, such as baccarat and pai gow poker, and removal of the $100 betting limit beginning May 2021.”

Last November, Colorado voters , allowing for higher bet limits and new table games in the gaming towns of Black Hawk, Central City, and Cripple Creek.

Bain notes his $14 projection for Full House stock assumes a 15 percent return on investment from the Bronco Billy s expansion, which the analyst says is the “low case.”

However, that price forecast doesn t include the company procuring any new iGaming operating rights or winning the competition to open and run a casino in Waukegan, Ill. Earlier this year, Bain pointed out that coming out on top in Illinois to Full House s share price.

Combined, he sees online casinos and the Waukegan project adding $7 to his $14 target, meaning Full House could nearly triple from the Feb. 26 close.

Because of the COVID-19 pandemic, the Illinois Gaming Board (IGB) hasn t made a call on Waukegan bids. That decision is expected later this year. Previous speculation indicated Full House s proposal was leading the pack.

The Nevada-based company’s , consisting of just five venues, one each in Colorado, Indiana, Mississippi, and a pair in its home state.

Despite a gain of more than 2,200 from its March 2020 lows, and the potential to more than double or triple, Full House isn t a richly valued name. In fact, data suggests it s cheap.

Accounting for a “normalized post-Bronco Billy s expansion,” Full House trades at 5.3x estimated 2023 earnings, compared to an average of more than 10x for the broader regional casino peer group, says Bain.

Even a jump to a multiple of 7.5x still a discount to rivals means Full House would trade at $14, according to the analyst.